The global economy faces an extended multi-year period of low growth, with the policy gridlock and mistakes in Europe, the US, and elsewhere in dealing with deleveraging the bad debt that was due to the destructive exuberance of the culture of the deregulated finance industry since the 1980s.

Economists reckoned that government's could do more damage taking control of the boom than they would by having a crash and picking up the pieces. They were dead wrong.

Asia’s boom was driven largely by intraregional manufacturing linkages: intermediate goods and parts were sourced from within Asia for assembly into final goods exported to advanced economies. But, with budget-tightening around the world, demand for Asia’s exports is expected to continue to falter. Where, then, should Asia look for another source of growth?

Upgrading the service sector – for example, business processing, tourism, and health care – could play a critical role in the region’s future growth.

A good example is China, which has huge net foreign assets due to its current-account and capital-account surpluses over the last for two decades. However, its economic growth is highly sensitive to global conditions and Europe’s malaise has hit China’s exports badly. China’s 12th Five-Year Plan calls for a shift in the country’s economic model from export-led growth toward greater reliance on domestic demand, particularly household consumption. That means slower economic growth and less demand for Australia's iron ore.

While huge amounts of money have been poured into physical infrastructure, public expenditure on human capital and social security is below the world average. More resources should be reallocated from physical capital formation to human capital formation.

In Australia there is too much focus on a single economic power, namely China, and its impact on Australia's economic growth; too great an emphasis in Canberra on bilateral relationships are all that are necessary to secure Australia's future; and too much scepticism in Canberra about the feasibility of a new regional economic architecture in Asia, such as the northeast Asian region around China, South Korea and Japan.

Comments

The banking industry sees no greater purpose than the acquisition of money. This led to well-documented aggressive lending by the financial sector.They covered their tracks by saying that the cause of the financial crash was the mortgagees who could not pay and committed fraud through misrepresentation of their incomes.

I think the cartoon is biased. Thelma and Louise would be better indicated as caricatures of Cantor, Boehner and their corporate string-pullers, and long term policies of bloody-minded obstructionism paralleled by the Abbott Right in Australia; also massive and unproductive continued corporate scamming in the US.
AS for China, et al, the concept of the economy operating as vehicle for improving the lives of its subjects:
the horror, the horror.

We have always been a colony, economically and culturally. Looking upwards to our superiors, in turn, UK [the olde country] then post war the US followed by Japan and China. Always a cringe which is the sign of a deep felt and inculcated inferiority complex, not only cultural [ABC = BBC, commercial TV = American crap, ditto for music, film, art [remember the audacity of the australian school of artists who broke from European dominance?] fads and fashion but also allowing our economy[including the manufacturing and financial sectors, even agriculture] to be dominated, and thus directed, by overseas companies for their benefit not ours.
Symptoms include the pride in sport, cos if we cant be independent and smart at least [and it is least] we can throw a ball or swim. [Abbott style].
We sell ourselves short.
Of course it suits a lot of our 'natural leaders' to promote this inferiority as the conservative strength is based on these old obsolete ties. Think St Johns, Charlie and whatsername, our [sic] flag,the comprador class of the business elite trained in UK/US/European management without a clue about Asia and even less about South America and Africa.
We need to be independent, in thought and policy. Get rid of the cultural cringe and its causes, look at what we can do [and in isolated cases have done but thrown away].
Get rid of the unsavory impact of global capitalism on our land and people.

The OECD report confirms the fact that on a purchasing power parity basis, China is projected to pass the eurozone as the second biggest economy in the world and, within a few years, will also surpass the US. India is overtaking Indonesia to now be the third largest economy in the world and the OECD estimates that in 20 years, it will be larger than the eurozone.